Question

Required information

West Company acquired 60 percent of Solar Company for $301,500 when Solar’s book value was $401,500. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $201,000. Also at the acquisition date, Solar had a trademark (with a 20-year life) that was undervalued in the financial records by $61,000. Also, patented technology (with a 10-year life) was undervalued by $41,000. Two years later, the following figures are reported by these two companies (stockholders’ equity accounts have been omitted):

	West Company Book Value				Solar Company Book Value				Solar Company Fair Value
Current assets	$	621,000			$	301,000			$	321,000
Trademarks		261,000				201,000				281,000
Patented technology		411,000				151,000				151,000
Liabilities		(391,000	)			(121,000	)			(121,000	)
Revenues		(901,000	)			(401,000	)
Expenses		499,000				301,000
Investment income		Not given

What is the consolidated trademarks balance?

Answer 1

Answer:

West trademark balance + solar trademark balance + aqusition date undervalued - amortization for two years for under valued added back = consolidated trademarks

Consolidated trademarks = 261,000 + 201,000 + 61,000 - 6100

= $ 516,900